Why is Ethereum (ETH) Price Down Today?

Why is Ethereum (ETH) Price Down Today?


Key Takeaways:

  • Bitcoin correction swept ETH off its local top.
  • Several Ethereum future ETFs launched in the US on Oct. 2.
  • Interest in the Network grows.
ETH price dropped after Federal Reserve said two more rate hikes might be in the future
ETH price dropped after Federal Reserve said two more rate hikes might be in the future

YEREVAN (CoinChapter.com) — Ethereum token Ether (ETH) traded at just above $1,650 on Oct. 3, after losing 5.3% in two days.

ETH dropped to key support

In detail, Ether’s price advanced 10% in the last week of September and hit a local peak at $1,750 on Oct. 1. However, after retesting the 200-day exponential moving average (200-day EMA; blue wave) as resistance, ETH followed the Bitcoin-led correction that printed red candles on the charts of all top 40 digital assets.

If ETH holds the 20-day EMA support (red wave), it could consolidate sideways in the coming sessions, given the 5% cool-off in the trading volumes.

Why is Ethereum Price Down Today?

Rising US Bond Yields

The ongoing macroeconomic instability could have pushed the Ethereum price down today. For example, government bond yields have surged per the Fed’s hawkish policies.

At the same time, the US Treasury yield curve has been inverted since 2022, ringing recession bells and threatening the risk-on markets, such as cryptocurrencies. The benchmark 10-year yield climbed to 4.76% on Oct. 3, as the 2-yield stood at 5.1%.

Moreover, Over $16 million worth of Ether options positions were liquidated on Sep. 28. According to on-chain data tracker Coinglass, the unwinded ETH options were accompanied by a “flood” with over $18.8 million in Bitcoin contracts, revealing the bearish sentiment across the sector.

“Sell the News” Event

Investment firms ProShares, Valkyrie, Bitwise, VanEck, Kelly, and Volshares launched nine ETFs on the Chicago Board Options Exchange (CBOE) on Oct. 2.

VanEck’s Ethereum Strategy ETF (ETUF) is the “only ETF providing focused exposure to ETH futures structured as a C-Corp.” The firm claims ETUF offers a “more efficient tax experience for long-term investors.”

Meanwhile, the ETFs did not draw the desired attention just yet. Bloomberg Intelligence analyst Eric Bulchunas described the volume as “meh” on Twitter as of Oct. 2.

Why is Ethereum price down today, Why is Ethereum (ETH) Price Down Today?
Comment on Ether Futures ETF by Bloomberg’s Eric Balchunes. Source: Twitter

The low interest might demonstrate a case of the “buy the rumor, sell the news” effect, where an asset’s price rallies before a major event, then slide when the hype dies down.

Moreover, the mentioned future ETFs came as the crypto community awaited the possible approval of ETH and BTC-based spot ETFs, with several filings in the US Securities and Exchange Commission (SEC). Notably, the agency has not greenlighted any spot crypto ETFs in the US as of Q4 2023.

Custodians Unload Their Ethereum Tokens

The muted initial reaction to the ETFs might not reflect users’ interest in the Network. As of Oct 3, the Ethereum chain’s total staked holdings rose to 29.6 million ETH, worth roughly $49 billion.

Moreover, much like BTC holders, ETH wallets opted for self-custody solutions, moving their holdings off exchanges. As of Oct. 3, ETH exchange reserves shrunk to 14.5 million coins, a near-60% decline since 2020.

Why is Ethereum price down today, Why is Ethereum (ETH) Price Down Today?
ETH reserves on exchanges have dropped 60% since 2020. Source: CryptoQuant.com


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